When it comes to solar panel installations, the hotbed of new sun-soaking power is New Jersey. In the meantime, the economic advantage of solar-power generation in Pennsylvania has started to fade.
Solar energy development depends heavily on government incentives such as rebates, tax breaks and a tradable commodity known as an SREC or solar renewable energy certificates. If a homeowner installs solar panels and contributes to the electrical grid, credit is given for that production in the form of an SREC. Government regulations mandate public utilities use alternative energy. So the homeowner could sell that SREC on the open market to a utility company that needs a diversified energy portfolio.
Sale of those certificates is one way to recoup the high costs of installing solar power. But Pennsylvania’s solar incentives have created a glut of SRECs, sending the price down from a peak of about $300 a certificate to about $80 today.
Brad Burton is vice president of One Block Off the Grid, a San Francisco-based company that negotiates group discounts for homeowners interested in going solar.
“When project developers get out there and they’re looking at the economics, looking at their return on investment for installing a solar system, SRECs are something they absolutely take into consideration,” said Burton. “And when the long-term value of SRECs comes into question, then the long-term value of installing solar comes into question.”
Burton says when that happens, rain clouds gather over the solar industry.
Pennsylvania state Rep. Chris Ross of Chester County has introduced legislation to increase demand and reduce supply by raising the number of SRECs needed by the utilities. And he wants to ban Pennsylvania utilities from buying those SRECs from out-of-state sources.